Market Watch: Mobile DRAM Misses Mark

Despite a slew of market research highlighting portable devices as a growth driver for DRAM, 1Q13 mobile DRAM revenues were down.

We might be entering the post-PC era, but worry not, memory industry, any sales losses there will be more than offset by the burgeoning mobile-platform market. At least, that has been the message of a slew of market research reports over the last several years.

It's a nice theory, but events may not be playing out as planned. Indeed, according to the most recent data from IHS iSuppli, falling prices and a seasonal dip actually dragged down first-quarter 2013 mobile DRAM revenues by more than 15 percent from the previous quarter, from 2.6 million to 2.2 million. Even more startling, the mobile share of the overall DRAM market fell from 28.8 percent in the previous quarter to 28.5 percent.

The news isn't all bad, of course. Mobile DRAM grew by 1.4 percent over the period, but that was 42 percent lower than the overall 2.4 percent growth logged for the DRAM market as a whole.

The shift from PC to mobile platforms appears to be inescapable. That said, market restructuring doesn't take place overnight. Although any analysis of long-term memory-consumption trends points toward a steady shift to portable applications, we will see some oscillations about the new normal. The report's author, Mike Howard, attributes the activity to the 15 percent drop in average sale price, exceeded only by the 17 percent decline in the third quarter of 2012. That's actually an important dynamic, given that it places mobile DRAM at near price parity with its commodity cousin.

Those who watch this site will recall that several recent memory reports have observed that demand for commodity DRAM has driven up pricing as a result of PC manufacturers stockpiling memory modules. Further, according to Howard, mobile memory pricing is a function of manufacturing cost, unlike that of commodity memory, which is driven by supply and demand. It is this pricing disparity that lies behind the latest set of numbers.

A more granular view of the data reveals continued dominance of the DRAM market by Samsung Electronics, with a solid 52 percent market share by revenue. That said, the DRAM giant still lost 2 percent of market share over the period, with an 18 percent drop in revenue.

SK Hynix, which nips at Samsung's heels, suffered a 26 percent drop in revenue over the quarter, despite a 40 percent revenue increase year-over-year. It, too, lost market share -- nearly 3 percent for an end-of-quarter total of 22.3 percent.

Meanwhile, the rest of the numbers make Micron Technologies' purchase of Elpida look like a pretty smart move. With a solid low-power memory product, Elpida saw revenues jump by 7 percent, with market share bumping up 4 percent to give it a 20.6 percent share of the overall market. Micron, which is only starting to expand its mobile DRAM portfolio, saw the largest growth within the group at 48 percent, although, given its very small mobile DRAM base, that isn't quite as impressive as it sounds. Still, it was enough to boost its market share up to 4.2 percent.

Do you believe that the future of computing lies in mobile, multi-purpose platforms, or do you think that long-term users will return to the desktop as a way of getting best value for their money?